In last nights State of The Union address, President Obama unveiled a new type of savings plan call a “MyRA” that will allow Americans to buy savings bonds in a starter retirement account that “guarantees a decent return with no risk of losing what you put in,” said President Obama during his State of the Union address.

Obama said he would direct the Treasury Department to create the new type of Treasury Bond called the “MyRA” which sounds an awful lot like an IRA.  These accounts will be used to encourage people to invest more simply in Treasury Bonds.

Obama made several points that I find interesting and that are just a sign of the times and the changes in the economic future we are living into.

“Today, most workers don’t have a pension.” – The majority of workers do not have a pension today due in part to the economic pressures that continue to be placed on large employers by over regulation from the government.

“A Social Security check often isn’t enough on its own.” – Social Security was never intended to be the sole form of retirement for individuals.  Franklin D. Roosevelt signed Social Security into law in 1935 at a time when the US was just beginning to recover from the Great Depression.  Millions of people were still out of work and millions more had lost everything when the stock market collapsed.

“While the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s,” – Not only does this not help people who don’t have a 401(k), there is a good chance that this last gain in the market, might not even help those who plan on retiring in the next 5-10 years.

Some of the proposed benefits of the “MyRA” are:

  • Offered through a familiar ROTH IRA Account, backed by the U.S. Government
  • Provides an alternative to workers whose private sector providers do not offer retirement savings accounts tailored to smaller balance savers.
  • A safe and easy to use starter savings account for retirement.
  • Would provide an appropriate balance of risk and return.

While all of this sounds good, so did 401(k)’s when they were first introduced.  Interestingly enough, in briefing materials accompanying the State of the Union address, the administration noted that many private-sector providers don’t allow “smaller balance savers” to open accounts; providers who do allow such accounts often charge fees that can eat up a proportionately high percentage of their balances.

To me this sounds like nothing more than another government bond that Americans can buy to loan the government money so it can borrow more money and continue it’s crazy deficit spending.

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